GST mop-up on track; fisc not un­der threat

A monthly col­lec­tion of around ₹80,000 cr ap­pears suf­fi­cient to meet the Cen­tre’s and States’ needs

The Hindu Business Line - - FRONT PAGE - LOKESHWARRI SK

The Goods and Ser­vices Tax (GST) col­lec­tions for De­cem­ber 2017 show an in­crease, but de­spite this there are con­cerns that the tepid col­lec­tions since July could pose a prob­lem on the fis­cal deficit front.

How­ever, a closer look at the num­bers shows that these fears are mis­placed. The Cen­tre’s tax col­lec­tion, as per the CGA (Con­troller Gen­eral of Ac­counts), ap­pears to be on track to achiev­ing the Bud­get es­ti­mates for 2017-18. There are, how­ever, many trou­ble spots in the new regime.

The com­plex­ity of the GST, which com­bines many of the in­di­rect taxes of the Cen­tre and States, has made it quite dif­fi­cult to es­ti­mate the ex­pected monthly col­lec­tion tar­get.

At a press con­fer­ence in Au­gust 2017, Fi­nance Min­is­ter Arun Jait­ley said that the col­lec­tions in July were bet­ter than the tar­get of ₹91,000 crore for that month. This fig­ure has been used since then as a ball-park fig­ure for mea­sur­ing monthly GST col­lec­tions.

If we use this fig­ure, GST col­lec­tions in Oc­to­ber (₹83,346 crore), Novem­ber (₹80,808 crore) and De­cem­ber (₹86,703 crore) are well short of the tar­get. But that may not re­ally be the case.

To es­ti­mate the targeted monthly GST col­lec­tion, we worked back­ward to see the pro­jected rev­enue in the Bud­get es­ti­mate for 2017-18 from goods and ser­vices that have been put un­der GST. While service taxes have mostly moved un­der GST, only about a third of ex­cise duty col­lec­tions are un­der GST since the taxes on many petroleum prod­ucts are still out­side the new regime. Un­der Cus­toms duty, al­most 64 per cent of the col­lec­tions are now un­der GST.

Us­ing this ba­sis, around ₹43,000 crore of GST need to be col­lected by the Cen­tre monthly to­wards its in­di­rect tax col­lec­tions. A por­tion of this will de­volve to the States as part of their share in the Cen­tre’s rev­enue.

States to­tally have to be dis­bursed ₹43,000 crore ev­ery month, as­sum­ing 14 per cent an­nual growth from their 2015-16 rev­enue. Work­ing with these num­bers, a monthly GST col­lec­tion of around ₹80,000 crore ap­pears suf­fi­cient to meet the Cen­tre’s and States’ needs.

Ac­tual num­bers

The fact that the Cen­tre has not fallen short in its in­di­rect tax col­lec­tions is borne out by the num­bers from the CGA. Gross tax rev­enue of the Cen­tre for the pe­riod be­tween April to Novem­ber 2017 was ₹10,87,302 crore, up 16.5 per cent from the amount col­lected in the same pe­riod in 2016-17.

In­ter­est­ingly, gross in­di­rect tax col­lec­tion of the Cen­tre in this pe­riod was up 18.2 per cent, hav­ing risen from ₹5,08,924 crore to ₹6,01,904 crore.

While the de­vo­lu­tion to States was 25 per cent higher, the Cen­tre’s net tax rev­enue has man­aged to in­crease 12.59 per cent, show­ing that the Fi­nance Min­is­ter will not have too much difficulty in bal­anc­ing the fisc.

The catch

While the Cen­tre’s col­lec­tions are on track, al­lo­ca­tions to States can pose a prob­lem. “Due to the fact that IGST rev­enue is dis­bursed over a pe­riod of time, there is a think­ing amongst States that there is a rev­enue short­fall,” ex­plains Gau­tam Khat­tar, Part­ner, In­di­rect tax, PwC.

Dis­putes on in­put-tax credit claimed by busi­nesses in the pro­vi­sional GSTR 3B form are another is­sue that could im­pede cal­cu­la­tions. “Def­i­nitely, this is the ma­jor con­cern for the Depart­ment be­cause in­voice match­ing is the back­bone of GST,” says Vishal Ra­heja, DGM, Tax­mann.

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